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Toyota is demonstrating its level of commitment to hydrogen fuel cell cars with a new initiative that partners private companies and public sectors to create a “carbon-neutral hydrogen supply chain.”

“The overall environmental benefit of hydrogen is only as strong as the method used to produce it,” said Toyota.

The comment directly addresses one of the biggest criticisms of hydrogen-powered cars: the fact that producing hydrogen with methane and conventional electricity doesn’t offer any environmental benefit over gasoline-powered vehicles.

But research has also shown that when hydrogen is produced from renewable energy, the carbon savings of a fuel cell vehicle (FCV) is significant.

“Hydrogen has the potential to permanently change the way we generate and use power,” Toyota said. “It can be created using renewable energy sources, stored, transported, and used at a later point – all with minimal environmental burden.”

Toyota Motor has teamed up with Yokohama City and Kawasaki City, where the test facilities will be located, to launch its “full-fledged carbon-neutral hydrogen supply chain.”

Toyota’s proposed carbon-neutral hydrogen fuel supply chain.

Each location will create hydrogen using water and electricity generated by wind. Grid power will only be sourced as a backup. A portion of the hydrogen will be stored locally, and the rest will be transported to coastal areas to refuel hydrogen-powered forklifts. The initiative will also include a feasibility study on the hydrogen supply chain.

Toyota is schedule to being implementing this project, along with its partners: Toshiba Corporation, Iwatani Corporation, Toyota Turbine and Systems and Kanagawa Prefectural Government. Additional support will come from Japan’s Ministry of the Environment.